Foils from the speech in pdf

Your Excellencies, ladies and gentlemen:
Good morning to all of you. I am very pleased to see you all in Stavanger.

The host for this conference, INTSOK, is co-founded by the Norwegian government and the private sector. This has proven to be a successful cooperation, with the aim of promoting the Norwegian petroleum industry in international markets.

Tomorrow, the Norwegian prime minister will open the Offshore Northern Seas Conference. As you all know, the topic for the ONS conference is “Bridging the energy gap”. The focus will be on global challenges and opportunities in a world with increasing energy demand, higher oil prices and with energy security high on the agenda.

Allow me to spend my time sharing with you some reflections regarding the Norwegian Continental Shelf and our petroleum industry against this background.

It is important to emphasize the huge potential that lies within the petroleum industry in Norway. Our large resource base and the competence and technology level in the sector are our most important assets. A continuous focus on long term activity on the Norwegian Continental Shelf and at the same time give attention to international markets is necessary to maintain high value creation from this sector.

The largest oil producers and exporters in 2005
Energy security is high on the international agenda. At the G8 meeting in St. Petersburg in July this was one of the major issues addressed. The share of energy imports is growing well beyond 50% in major consuming countries and reserves become more concentrated.

Our challenge is therefore to secure a stable and predictable flow of energy at affordable prices. This must be done in an environmentally sustainable manner.

Although Norway is a small country in terms of population; in terms of petroleum production and exports we are ranked as the world’s third largest oil exporter – only surpassed by Saudi Arabia and Russia – and the eighth largest producer. In addition we supply Europe with about 15 percent of its gas demand.

In 2005, we produced nearly 3 million barrels of oil (including NGL and condensate) per day and 85 billion cubic metres (bcm) of gas.

We will continue to utilise our resource base in an efficient and sustainable manner, in order to contribute to meeting the world’s energy demand. This is a responsibility we share with other petroleum provinces around the world.

Macroeconomic indicators for the petroleum sector
Ever since Norwegian petroleum production started in the early seventies, the sector has contributed significantly to our economic growth and to the Norwegian welfare state.

Today, the petroleum industry is the largest industry in Norway:

In 2005, the sector accounted for 25% of the value creation in the country.

Through direct and indirect taxes and direct ownership, the state is ensured a high proportion of the values created from the petroleum activities. In 2005, the state’s net cash flow from the petroleum sector amounted to approximately 33 percent of our total revenues.

The investments amounted to 24 percent of the country’s total real investments.

Petroleum exports accounted for 52% of the value of Norway’s total exports. Exports of petroleum related goods and services are not included in this figure.

Undiscovered resources
The Norwegian Continental Shelf has been opened up gradually, from the South moving North. We divide the Norwegian continental shelf into three areas: The North Sea, the Norwegian Sea and the Barents Sea.

The undiscovered resources are estimated to be roughly equal to the volumes that have already been produced. Remaining recourses are estimated to be divided more or less equally between the three regions.

There are considerable variations regarding the degree of maturity in the different areas. The North Sea being the most mature. However, all of them still contain considerable undiscovered resources.

The international companies have played an important role in development of the resources on the NCS. Technology transfer and close cooperation between domestic and international companies have been essential to the rapid development of Norwegian petroleum competence.

Norwegian and Russian part of theBarents Sea
Let me reflect on one of these areas in more detail; the Barents Sea. The Barents Sea is by far the least explored part of the NCS.

Only 63 exploration wells have been drilled so far in this area. Two commercial discoveries have been made – the Snøhvit gas field and the Goliat oil field. The encouraging discoveries at the Goliat oil field have confirmed that there are more resources to be found in the Barents Sea, and that the Barents Sea also has an interesting potential as an oil province. My concern is to establish a sustained energy agenda for the north as this region may prove to become a new petroleum province in Europe and thus become important with regard to supply.

The Barents Sea is described by many as the cleanest ocean in the world. This must be preserved. Value creation in the Barents Sea must therefore take place in such a manner as to ensure the good co-existence between the different users of the sea and the environment, and under strict rules of safety.

Distribution of resources – fields in production
As I mentioned earlier, parts of the Norwegian continental shelf are currently defined as mature areas. Still, if we are able to increase the recovery rate, there is a considerable potential for further value creation in these areas.

The green bars over the line illustrates that, on the basis of present plans, significant oil resources will remain in the ground after the planned shutdown of the fields. Originally, many of the huge oil fields on the Norwegian Continental Shelf should have been closed by now. However, a deliberate commitment to research and development of new technology has however made it possible to increase the recovery rate. The expected recovery rate in Ekofisk-field has increased from 17 per cent in 1971 to 46 per cent today. The added volume equals two years of Norwegian oil production! Increased recovery from existing fields is a priority. We have already set an ambitious target of a recovery rate of 55% for oil and 75% for gas.

Better exploitation of the resources constitutes an enormous potential that can generate significant values for the society, if it is exploited prudently.

Total petroleum production
After 35 years of production, only about one third of the expected total resources on the Norwegian continental shelf have been produced.

Total petroleum production on the Norwegian Continental Shelf will increase in coming years.

The exports of natural gas will increase considerably as new fields come on stream. Two new gas pipelines to the UK, Langeled and Tampen link, are currently being finalised. Our oil production is declining.

From the environmental point of view natural gas is the fuel of choice among the fossil fuels. Through the increase in natural gas export, Norway can contribute to the replacement of more polluting sources of energy and thereby to a more environmentally sustainable use of energy.

We will remain a reliable and long-term supplier of oil and gas.

Investment level - Norwegian Continental Shelf
The investments on the NCS are high and are expected to remain high in coming years. Two large projects among many smaller if not small projects, are about to be completed in 2007; the Ormen Lange Project in the Norwegian Sea operated by Hydro and the Snøhvit Project in the Barents Sea operated by Statoil. The Ormen Lange project will export its gas through a new pipeline to the UK, Langeled and the Snøhvit project will export its gas as LNG. Both these projects are made possible by using new technology. Let me turn to the issue of technology.

Petroleum research and technology
Technology development has been fundamental to the development of Norwegian petroleum resources. Through targeted R&D efforts we have managed to overcome the technological challenges and barriers that exploitation of the resources on the NCS have represented. My government is deeply committed to prioritizing research and development in the petroleum sector.

The giant concrete platforms of the 1970ties and 1980ties have been followed by floating production and sub-sea systems. We have moved operations from offshore to onshore, seabed separation and extended well stream transfer to onshore plants.

Technological development is important in order to exploit our petroleum resources more efficiently but also to seek new and improved solutions with regard to environmental challenges.

In order to stay competitive it is important that both the companies and the government focus on technology, competence and education. Over the years investments in R & D has paid off significantly.

Norwegian industry – competent and competitive
As mentioned in my introduction, our petroleum industry with its competence and technology together with our resource base are our most important assets.

Since petroleum was first discovered on the Norwegian Continental Shelf one of the government’s objectives has been that the petroleum resources shall be managed for the benefit of the Norwegian society as a whole. Development of national knowledge and competence was an important goal at an early stage. Through technology- and knowledge transfer and active cooperation between national and international companies a world class petroleum cluster developed on the Norwegian Continental Shelf.

I am very pleased to see that Norwegian industry also succeeds internationally.

During the last decade, the Norwegian petroleum industry has managed to conquer market positions in petroleum provinces literally all over the world. A significant trend is that the turnover from geographically distant regions is increasing considerably!

Since 1995, turnover from the international markets has tripled. This is remarkable when activity in the home market has never been higher. The industry has managed to maximize value creation on the Norwegian Continental Shelf and to expand internationally.

Let me conclude:
I have aimed at giving you confidence that Norway has a large remaining resource base which we will develop in an efficient and sustainable manner to meet the world’s energy demand.

My government is committed to contribute to continued research and technology development in the petroleum sector. This is necessary for the petroleum industry to stay competitive.

My Government will continue to support INTSOK and the Norwegian petroleum industry in international markets.

I am confident of a long term profitable activity by Norwegian Petroleum industry at the Norwegian Continental Shelf and abroad.

Thank you for your attention.